Crestar has sizzling first quarter Earnings set record at $55.4 million despite poor winter weather

April 12, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Even bad winter weather couldn't stop Crestar Financial Corp. from earning a record $55.4 million in the first quarter of 1996.

The Richmond, Va.-based banking company, which has $17.9 billion in assets, said yesterday that its net earnings were up 12 percent in the first quarter that ended March 31, compared with net earnings of $49.7 million a year ago. The company earned $1.27 a share, compared with $1.14 a share in the first quarter of 1995.

"To this date, it has been one of the better earnings gains I have seen," said Alex C. Hart, and analyst with Ferris, Baker Watts Inc.

Crestar's earnings were driven by its income from loans and investments, which was up 5 percent to $181.5 million, and its income from fees and service charges on products that include checking accounts and ATMs, which jumped 13 percent to $77.7 million. The company also took $2.4 million in gains from securities.

Crestar's net interest margin, a ratio that shows how much a bank earns on loans and investments after interest payments to depositors and creditors, edged upward to 4.63 percent from 4.55 percent.

Richard G. Tilghman, Crestar's chairman and chief executive officer, said, "Several severe weather systems disrupted much of our customer base." Crestar paid $750,000 in the quarter to remove snow from parking lots and to keep its ATM network running.

"It is a retail business," Mr. Hart said. "If you can't get to the store, you can't do the business."

Crestar also integrated the operations of the $2.5 billion-asset Loyola Capital Corp. in the quarter by converting computer systems and training new employees. Crestar acquired the Baltimore-based thrift at the end of 1995. The company has 30 branches in its Maryland region.

Loans remained flat, largely because of stiff competition and because more consumers paid off mortgages or refinanced them to take advantage of lower interest rates, said Eugene S. Putnam Jr., Crestar's head of investor relations.

The competition is "as tough as it has ever been," Mr. Putnam said. "I'm not sure it can get tougher. The higher up in the market you go, as far as the size of borrowers, the more competitive it is."

Crestar's ratio of problem loans to total assets remained at a low 0.49 percent. But the company wrote off $21.4 million in bad loans in the quarter, compared with $12.4 million a year ago. The increase in write-offs was driven by credit-card losses, the company said.

Crestar closed yesterday unchanged at $57.

Pub Date: 4/12/96

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